Atom can’t feed fab monster; Intel outsources chips to TSMC

Monday morning's announcement that Intel will outsource the production of some …

The late winter storm now pounding the northeast US isn't the only freak weather event currently in progress. Hell itself has frozen over, and the proof is that, for the first time in history, Intel is partially outsourcing the fabrication of one of its CPUs to a foundry.

Intel and TSMC have jointly announced the start of a long-term, "strategic" collaboration in which Atom IP will be ported to TSMC's manufacturing process, with the Taiwanese foundry fabricating Atoms for some customers.

"It is a long-term collaboration. It is not about capacity. It's a strategic relationship that allows us to expand the growth opportunities for both companies," said an Intel spokesperson on a call announcing the venture. "This relationship between us and TSMC is strategic in nature; it's the first time we've ported a processor externally outside of an Intel process."

Both parties are being deliberately vague on the timing and the process node at which this will start, stressing that the current announcement is just about the "memorandum of understanding" (MOU) that they've signed. (The press release is similarly vague.) News of specific plans and products will follow much later, once the details have been worked out.

Intel's Sean Maloney set out to give the company's official explanation for the move by touting Intel's recent announcements of investments in 32nm and stressing that Intel still sees itself as a manufacturing company. He then jumped to the non-sequitur that the TSMC agreement will allow Intel to "attack new markets" and offer "post-recession products."

In response to questions, Maloney stressed that the existing Atom roadmap is unchanged, and that the TSMC relationship was not about replacing Intel's existing fab capacity, but about new markets. "We're doing it because it enables us to get access to a market that we can't do alone," Maloney said. "This doesn't replace what we're doing already, or what they're doing already. It's additive to what we're currently doing."

Intel totally failed to explain why its massive new investments in 32nm, not to mention its current 45nm plants and substantial legacy fab capacity, aren't just as amenable to "attacking new markets" as outsourced fab capacity. But while Intel can't possibly admit this, the reason is as clear as day: Atom is just too cheap to support Intel's legacy business model, which is about funding expensive new fabs on the backs of high-margin sales of existing, high-performance processors.

Betting the farm

Intel's margins on Atom are much thinner than those on regular desktop and server CPUs, and with each process shrink, Atom's cost (and price) will go down. But fabs get more expensive with each shrink, so the result is that Intel has to sell many more Atoms at 32nm than it does at 45nm to make money. The demand for all of those Atoms may or may not materialize, which is why Intel will pay TSMC to fab them and share the risk that the demand may not be there. Meanwhile, Intel wants to save its (very costly) in-house fab capacity for high-margin products, like its CPUs.

There's one big question about the new arrangement: could Intel actually stay in business by producing mainly Atom-class products on its 32nm and smaller lines, if the demand for performance increases fails to recover?

The main problem facing Intel is that, right now, nobody wants high-margin, high-performance CPUs. The demand is there for the cheap stuff, but Intel would rather not take the risk that this appetite for cheap will continue to balloon by turning even more of its premium in-house fab capacity to the task of cranking out Atoms. Better to dedicate the costly new 32nm fabs to producing high-margin CPUs on the hopes that demand for performance will eventually recover, while letting TSMC's fabs support any further growth in the Atom market.

There's one big question about the new arrangement: could Intel actually stay in business by producing mainly Atom-class products on its 32nm and smaller lines, if the demand for performance increases fails to recover? In other words, it could be that Intel has no choice but to bet everything on the possibility that a global appetite for 32nm, high-performance, high-margin CPUs will actually rematerialize, because the company couldn't keep going if it had to use its new fabs to support a rising demand for Atoms in-house.

I think the answer to the above question is "no, Intel couldn't survive in a world where the vast majority of customers just want ever cheaper Atoms, and relatively few are willing to pay premiums for continued performance scaling." I don't have the numbers to back this up, though.

On a final note, props to Dave Manners, who saw this coming when Craig Barrett simply resigned as Intel's Chairman without triggering the normal chain of succession at the company:

It looks as if, instead of waiting for the normal orderly succession, Barrett has decided that it's time to go. Now why should he want to go? Having survived 35 years in the fearsomely confrontational Intel culture, he would not leave over a small thing.

But there's one issue he might leave over: Intel's strategy as a manufacturer. Intel has always been a leader in process engineering. Barrett came from the manufacturing side of Intel, and re-vitalised the companies' fabs during his time as CEO with his 'copy exactly' strategy. If there was to be any change proposed in Intel's manufacturing strategy, Barrett might decide he doesn't want to stay around to preside over it.

Today's announcement of a major shift in Intel's manufacturing strategy suggests that this is exactly what happened. Barrett apparently didn't want to stick around at an Intel that outsources parts of its core CPU business.

47 Reader Comments

Just watched "The Matrix Reloaded" again last night. This article reminded me of the line "There are levels of survival we are prepared to accept". There will always be a sustainable market for the high-margin, high-performance chip. Always. Whether Intel, or AMD, or MIPS, or SPARC, or POWER has a place in that market is perhaps a different story, and depends on strategy, finances, pricing, competition, cost structure, etc.

I don't see what this has to do with R&D; moving Atom out of Intel's fabs won't help pay for those fabs. I think this is more likely to be about SoCs like Canmore and Tolapai that contain a lot of non-Intel IP (like PowerVR). Instead of porting all that third-party IP to Intel's process, why not port the Atom core to TSMC? If Intel gets really radical, they may license Atom as a hard macro to SoC vendors to attack the ARM diversity argument.

I'm calling bullshit on that claim. From what I recall of the IBM PC history, the reason that IBM decided to design its PC around the Intel 8088 in the first place, rather than Motorola's clearly technically superior 68000 series, was due to multiple sources for the CPU. I've forgotten the names of the other company(ies) involved, but Intel had "outsourced" the 8088, and that gave IBM stronger assurance of having a consistent supply, which Motorola could not guarantee as well.

I'm calling bullshit on that claim. From what I recall of the IBM PC history, the reason that IBM decided to design its PC around the Intel 8088 in the first place, rather than Motorola's clearly technically superior 68000 series, was due to multiple sources for the CPU. I've forgotten the names of the other company(ies) involved, but Intel had "outsourced" the 8088, and that gave IBM stronger assurance of having a consistent supply, which Motorola could not guarantee as well.

So this is what happens when CPUs get powerful enough that people don't care about getting the newest, fastest models? Intel's margins fall off dramatically and they outsource manufacture of the cheapest, lowest margin chips.

Clearly the author doesn't know much about semiconductor manufacturing. First, Intel can manufacture Atom at a far lower cost then TSMC, what they can't do is make countless flavors of it. A knowledgeable person would realize Atom can be made at Intel for around $5 a pop. The problem is it takes a large team to develop each derivative under Intel's manufacturing flow. TSMC has a flow that is geared for lots of custom designs and as such they can support multiple customers much easier than Intel can. Make no mistake, Intel's costs are much lower than TSMC's but supporting all the potential customers isn't Intel's thing.

Interesting. A lot of critics and analysts have been wary of the margins on Atom for a long time so I guess this just tidies things up for Intel. Lower risk for them, similar profits and less investment on their part. I guess this'll just let them leverage their more advanced processes for their mainstream CPUs. If we're lucky it could mean lower prices, although they're not that high at the moment to begin with.

Some media are reporting this MOU covers only "some" Atom cores and that Intel will continue to produce Atom chips in its fabs. Intel's early move to 32nm production this fall supports this approach as its 45nm investment is just a year into production at excellent yields.

Given this, it seems Intel wants to capture OEM business that might hesitate to join with the monolith that is Intel. Rather the company will use an arms-length relationship with TSMC to capture that business.

There is so much misinformation going around it's staggering and news sites just keep repeating the misinformation and quoting each other as confirmation.

Intel is not quitting Atom manufacturing. They are licensing the core to TSMC to allow customers to design it in to custom designs much like ARM is designed in other designs today. Intel is and will remain the low cost producer and their margins on Atom are what other companies would kill for. It's simple to do the math. It's just that now customers will be able to roll their own designs at volumes Intel could not justify for internal development.

I'm purely speculating here, but in light of a recent story I read about TSMC being in financial trouble due to a reduced number of fabrication orders (in turn due to the flailing global economy), I'd guess that this move by Intel is more of a "throw-TSMC-a-bone-while-getting-a-kickback" than anything else.

As others have stated, there is no benefit to Intel outsourcing production of Atom processors when it can do it cheaper itself, and this is probably a long-term agreement to help TSMC stay on its feet while making Intel some extra cash, be it now, or through a long-term licensing agreement.

Again, I'm purely speculating, so don't take any of this as fact, just observation.

And to add to that, since this stupid forum can't be bothered anymore with the usual buttons, to sell those chips, IBM required a separate supplier, just in case Intel couldn't keep up with demand or whatever. People also think the reason they called the 586 processor a Pentium was so AMD couldn't enjoy a free ride anymore making clones of Intel chips.

Another reason for this may be that TSMC made Intel an offer they couldn't refuse. TSMC has a bunch of capacity just sitting idle. Making very little is better than making nothing, especially when they were so very recently lamenting the drop in chip orders.

Atom was designed from the beginning to be ultra power efficient. The HiK/MG process allows for either performance or power savings. Atom's design chose the power savings. Additionally, if Intel's claims regarding yield are to be believed, no one can produce Atom at the cost Intel can. They're just that good at maximizing yield. As far as I can tell from the press release it appears Intel did not license process IP. As such TSMC's Atom core will not benefit from the advantages Intel's process has to offer. It likely will not match the power savings Intel enjoys but that will be lost in the noise in a SOC.

First, Intel can manufacture Atom at a far lower cost then TSMC, what they can't do is make countless flavors of it. A knowledgeable person would realize Atom can be made at Intel for around $5 a pop. The problem is it takes a large team to develop each derivative under Intel's manufacturing flow. TSMC has a flow that is geared for lots of custom designs and as such they can support multiple customers much easier than Intel can. Make no mistake, Intel's costs are much lower than TSMC's but supporting all the potential customers isn't Intel's thing.

This is a really good point, but again, I still believe that Intel can't keep the process shrink train rolling on Atom-level margins.

As Wes points out, it's not just R&D (I didn't title the post, but I have gone back and tweaked the title now)--it's the total cost of bringing a next-gen fab online, a cost that can't be supported unless you got high enough margins off the products of the previous-gen fabs.

Anyway, it's very obvious that Intel can make Atoms at far lower cost than TSMC--in fact, that's a main point in my post! They can make Atoms at continually lower cost, and sell them at continually lower prices (as I point out), but they won't have a business if that's all that they're doing.

The problem isn't that they can't support all sorts of variations, either--it's that they can't do that with the combination of high margins and low risk that they like.

Anytime you make the decision to outsource a critical service, you're willing to pay a higher cost than doing it in-house because the service provider is typically taking on some kind of risk--so the risk premium plus profits are rolled into the higher cost of the service.

In the case of the TSMC outsourcing, Intel is taking on a higher production cost for Atom in part because it has to pay TSMC to take the risk that its fab capacity will be underutilized. So Intel is paying TSMC to carry some risk in this more volatile, highly commoditized market. (Whether they're also paying TSMC a profit in addition to that risk premium, who knows, since TSMC is losing money right now at a rumored 40% fab utilization... it's conceivable that TSMC traded this deal at a net loss in the beginning just to get their fab utilization up!).

Re: In the case of the TSMC outsourcing, Intel is taking on a higher production cost for Atom in part because it has to pay TSMC to take the risk that its fab capacity will be underutilized.

There are a lot of unanswered questions from the press release but could you show me where in the press release it says Intel will buy anything from TSMC? It does mention Intel customers but I take that to mean Intel will steer their customers to TSMC. I guess we'll find out at some point.

Re: The problem isn't that they can't support all sorts of variations, either--it's that they can't do that with the combination of high margins and low risk that they like.

Yes the problem is exactly that. With their current infrastructure they have a large team of designers and product engineers supporting each design. They're geared for high volume. If a customer comes to them and wants a different bell or whistle, that customer has to generate the volumes needed to support the development effort. Over time Intel could migrate to a different model with smaller teams and simplier flows but that's not their game now and it's exactly what TSMC and custom design houses do best. You want 100 million? Intel can do it best. You want 100 thousand? Go to TSMC. Intel can't make that big of a change overnight.

Very nice points about Intel strategy: 1) to find better returns in satisfying market demand for Atom without having to build new fabs; and 2) to let TSMC handle the nitty-gritty of customization of the Atom, an effort Intel feels would keep it from wasting its own expensive R&D on a lower margin/return product line.

Intel is also shooting two birds with one stone. One is in confronting the threat of ARM encroaching into its netbooks/notebook business. The other is to keep AMD from utilizing TSMC facilities. AMD has less fabs and relies more on outsourcing using its "asset-smart" strategy. If and when AMD decides on expanding capacity through outsourcing, it may have one less partner in TSMC to farm out capacity to.

Intel is at least one process shrink generation ahead of AMD and TSMC, or anybody else. It is comfortable letting TSMC in on its not-cutting edge process to produce low-margin atoms, and happy to know there is enough product to go around satisfying demand as a result, with nothing at all trickling down to AMD nor to ARM. And it is making production capacity unavailable in TSMC for any competition. If Intel uses all TSMC capacity, it will achieve both lower costs and castrate its competitors.

You claim Atom is low(er) margin. Please show us your numbers. At $5 cost and $20 ASP they can generate ~$36,000 profit per wafer(2400x$15). That's pretty darn good. If Intel gets 300 good C2D processors a wafer that's $8 apiece die cost. Packaging & test brings it up to say $20. Sold for $120 ASP leaves $100 profit. 300x$100 = $30,000 profit per wafer. Now which one were you saying is low margin? For a fab with a capacity of 5K wafers per month that's an extra ~$30 million profit a week by making Atom over C2D.

There's a variety of things about this move I don't get frankly. However it is world-of-duh obvious that if Intel is outsourcing it ... they don't think it will be a big winner and are worried about cost of goods vs sale price (i.e. margin).

The only reason to outsource to TSMC is the view that it is a commodity processor (which it is) and TSMC can get the cost of production down and thereby get better margin ... BUT ...

Intel has fab capacity to spare right now, so does everybody. I'm surprised they are outsourcing anything that they can build and sell at any price over marginal cost of production ... but then TSMC has the hurts too and may see the same game in play, and maybe is willing to pay Intel enough to make up for the incremental income. Could TSMC be willing to bid below Intel's marginal cost????

The bottom-trolling CPU game is bruising ... Atom is no slam dunk against either AMD or Via ... and if the pace of Atom progress goes down because of TSMC fab and design constraints and so on ... hate to say it, but it starts to look like an orphan.

Think Intel's ARM games ... they run one up the flag-pole, it doesn't go anywhere, and they axe it. There's a fair implication that they probably have some other "up the flagpole" venture (or several) in the works too ... we'll need to wait and see.

There's an analogy here to IBM which sold off the 4xx PPC IP to AMCC ... which surprised a lot of people because the existing BlueGene cores are modified 4xx cores. Everybody assumes that IBM must have a major refrib for the BlueGene lineage coming ... but it's been longer than expected and just exactly what it is isn't public (and I don't know, tho I have some guesses.)

Odds are Intel has something else in the fire ... they always do. But Atom looks to be headed off to the old CPU home. And my guess for the bottom line reason this is so is that it didn't beat ARM for the markets they hoped for...and instead it's just a low end PC CPU ... and Intel doesn't really do low-end PC CPUs.

1. As others have said, SoC with Intel not having to do the heavy lifting for the numbers involved.

2. As with the situation with AMD in the past, it's all about second sourcing: by having another source, Intel can get contracts for using the chip in places they'd not get it otherwise: this is more common than people may be aware of, especially in any long-term product where the product isn't likely to change much, such as car computers, or other embedded areas. Quite possibly, an Atom is overkill for such a thing, but you never know these days what they're putting under the hood, and if it is cheaper/better in some quantifiable way for that purpose than some ColdFire processor (say, just for getting experienced low-level coders to optimize things) then that's a big plus.

As others have explained, it's most likely has to do with integration of Atom with other IP.

The Atom is small and cheap enough that someone will want to have a chip that has an Atom core along with a bunch of other components.For Intel to explore that market, it would require two things Intel isn't used to to.First, Intel would have to work with the clients and third part companies to port those other components into Intel's process.Second, Intel would have to do this design effort cost effective for much smaller productions than the ones Intel is used to.

On the other hand, this is exactly what companied like TSMC do all the time.

Ephud, wafer costs are just the variable costs. And wafer profits are just gross profits. That said, Atom may produce more profits per wafer for Intel than any C2D processors.

However, Intel is not keen on hanging on Atom for their future. Consider a world where every laptop is a netbook running on Atoms (World A). And contrast that to a world where every laptop on a notebook running on C2D (World B).

There would simply be 1 fab in Atom World A for every 8 fabs in C2D World B, if World A and World B would have the same demand for laptops. This is based on your post earlier about each atom wafer producing 2400 and each C2D wafer producing 300 processors.

Which world would Intel rather be? C2D World B of course, since it stands to make more money. But as things are, the world is turning the direction of Atom World A.

This explains why Intel would rather not invest on new fabs, if the world is turning into an Atom World A. It already has too many fabs as it is. Converting the old fabs to new process shrinks for Atom still cost a lot of money. And hey, there's unused fab capacity with TSMC, and hey, TSMC is willing to invest to convert to new process shrinks. And hey, what if AMD and ARM wants TSMC to contract for them. Sorry, capacity already committed to Intel.

Intel then would end up soaking outside spare capacity, leaving out competitors out cold, and would be conserving its resources for the day the world starts to turn around and turn into a C2D World B. When that will happen is anyone's guess, but Intel is ready for that day. Meanwhile, it has already adjusted to the new realities.

And so, to sum it up, Atoms are still low margin when you look at the big picture, and not just at the wafer.

Ephud, wafer costs are just the variable costs. And wafer profits are just gross profits. That said, Atom may produce more profits per wafer for Intel than any C2D processors.

However, Intel is not keen on hanging on Atom for their future. Consider a world where every laptop is a netbook running on Atoms (World A). And contrast that to a world where every laptop on a notebook running on C2D (World B).

There would simply be 1 fab in Atom World A for every 8 fabs in C2D World B, if World A and World B would have the same demand for laptops. This is based on your post earlier about each atom wafer producing 2400 and each C2D wafer producing 300 processors.

Which world would Intel rather be? C2D World B of course, since it stands to make more money. But as things are, the world is turning the direction of Atom World A.

This explains why Intel would rather not invest on new fabs, if the world is turning into an Atom World A. It already has too many fabs as it is. Converting the old fabs to new process shrinks for Atom still cost a lot of money. And hey, there's unused fab capacity with TSMC, and hey, TSMC is willing to invest to convert to new process shrinks. And hey, what if AMD and ARM wants TSMC to contract for them. Sorry, capacity already committed to Intel.

Intel then would end up soaking outside spare capacity, leaving out competitors out cold, and would be conserving its resources for the day the world starts to turn around and turn into a C2D World B. When that will happen is anyone's guess, but Intel is ready for that day. Meanwhile, it has already adjusted to the new realities.

And so, to sum it up, Atoms are still low margin when you look at the big picture, and not just at the wafer.

Sorry yerrago but I don't think so. Atom is not a replacement for C2D or any other mainstream processor. It's intended for another market and not marketed into areas where it would displace products with higher ASPs. If you want to call Atom wafer costs variable costs then that works for me. The mainstream products make up the bulk of the volume so it's perfectly appropriate to view Atom costs and profits as variable. They are not and can not be the volume runner, but they don't need to be. They will consume far fewer wafer starts because there are so many more of them on a wafer. The challenge for Intel is to keep them in markets that don't encroach on Core or i7 sales. I think today's MOU is targeting ARM, nothing more.

No, and I agree, Ephud, Atoms and C2D's are different markets. Once everyone and his dog gets a netbook, then the seed has been sown. Next time around, some may find Atoms not quite to their needs and move up to C2D's. And some who used to buy expensive C2D's may decide an Atom-based netbook is sufficient.

And I agree the main target of Intel is ARM, as they are the emerging threat, whereas AMD has been already somewhat rendered on the sideline. The ARM is a many-headed hydra, and harder to battle, whereas AMD is a monolith with an identified Achilles heel that has been struck with a hard blow.

Intel doesn't want the Atom to be the volume runner, but they may end up being the volume runner, and if they do so, Intel is prepared for that possibility. With TSMC. If it doesn't, Intel has spared its resources to further develop and market the C2D, and make it retain or regain its status as the volume runner, for the sake of its profitability.

We agree on much more than we disagree. I think Atom is out to eat ARM's lunch more than the other way around. It's getting closer to ARM's power levels with better performance. I expect that trend to continue especially as they transition to 32nm.

Didn't anyone see the quote : "It is a long-term collaboration. It is not about capacity. It's a strategic relationship..." Key words: long-term, strategy. In fact, nothing to do about capacity (at least not now).

Does anyone think Intel would be doing something without calculating it first? Furthermore, does anyone think Intel would be doing something without thinking about profit, even if they have to lose at first?

We are not dealing with a local tough market where it can easily be "fixed" by simply going to a different country. People are simply not buying what they want to sell. Even closing fabs would not help. That is not how they came about. Originally everyone had need - to get better (which meant faster). People were willing to may a premium for that "better". Within recent years the old "better" was not same anymore.

Companies were trying to adapt, but could not find the need to fulfill while making a fortune. More years went by. Market now saturated with what people need. Then the crisis. The saturated market is now in slumber. You now have these giants that need to define the "need" to fulfill to persuade us to hand over cash.

Unfortunately today's "need" is not the same "need" that was 10+ years ago. Or even 5 years ago. People now want to have a computer that can last a very long time on a single charge. A portable high speed internet. Perhaps most of their gadgets consolidated into one. But same item will not fill everyones need. Some only need iPhone, while others need Asus Eee. Some others need a 14.1" laptop. Some others need something else still.

There are many people that have a "need" in each category. However, each category is not quite like the other. You can't just mass produce a variation of one product to meet everyone needs. Each category has its own special need(s).

I'm sure it is much more complicated than that, but the bottom line is that the existing companies are left with trying to figure out what is the role they will play in filling these "needs" and how to capitalize on those needs. Until these giants figure that out (and maybe even how to play nice with each other), there just may be someone else out there that is about to emerge to meet those needs and still make profit. Perhaps those new companies would be the new giants 10 years from now. Unless, of course, the existing giants buy them up in either a wise move or a frantic frenzy as an investment for the future.

Perhaps Intel already knows what it is going to do and what role it is going to play to meet current/future needs. Perhaps they are gambling and hoping that whatever they do today will be what keeps them alive in the future. Either way, they think this is a long-term strategy that they calculate they need to develop as they move into the future.

Didn't anyone see the quote : "It is a long-term collaboration. It is not about capacity. It's a strategic relationship..." Key words: long-term, strategy. In fact, nothing to do about capacity (at least not now).

Does anyone think Intel would be doing something without calculating it first? Furthermore, does anyone think Intel would be doing something without thinking about profit, even if they have to lose at first?

We are not dealing with a local tough market where it can easily be "fixed" by simply going to a different country. People are simply not buying what they want to sell. Even closing fabs would not help. That is not how they came about. Originally everyone had need - to get better (which meant faster). People were willing to pay a premium for that "better". Within recent years the old "better" was not same anymore.

Companies were trying to adapt, but could not find the need to fulfill while making a fortune. More years went by. Market now saturated with what people need. Then the crisis. The saturated market is now in slumber. You now have these giants that need to define the "need" to fulfill to persuade us to hand over cash.

Unfortunately today's "need" is not the same "need" that was 10+ years ago. Or even 5 years ago. People now want to have a computer that can last a very long time on a single charge. A portable high speed internet. Perhaps most of their gadgets consolidated into one. But same item will not fill everyones need. Some only need iPhone, while others need Asus Eee. Some others need a 14.1" laptop. Some others need something else still.

There are many people that have a "need" in each category. However, each category is not quite like the other. You can't just mass produce a variation of one product to meet everyone needs. Each category has its own special need(s).

I'm sure it is much more complicated than that, but the bottom line is that the existing companies are left with trying to figure out what is the role they will play in filling these "needs" and how to capitalize on those needs. Until these giants figure that out (and maybe even how to play nice with each other), there just may be someone else out there that is about to emerge to meet those needs and still make profit. Perhaps those new companies would be the new giants 10 years from now. Unless, of course, the existing giants buy them up in either a wise move or a frantic frenzy as an investment for the future.

Perhaps Intel already knows what it is going to do and what role it is going to play to meet current/future needs. Perhaps they are gambling and hoping that whatever they do today will be what keeps them alive in the future. Either way, they think this is a long-term strategy that they calculate they need to develop as they move into the future.

Intel's margins on Atom are much thinner than those on regular desktop and server CPUs, and with each process shrink, Atom's cost (and price) will go down.

Surely the cost of Atom goes down when they shrink the process, but that doesn't have to mean that they have to lower it's price. They could move to a smaller process and keep on selling it at (more or less) the same price, thus increasing their margins.

Most of these posts are furious apologies written by people smugly convinced that AMD's recent FAB strategies were a sign of impending doom... The posts about AMD "getting free rides from Intel" were equally as amusing.